‘Less exciting long-term savings crucial for financial security in old age’: CEA encourages pension investment

CEA Nageswaran urged Indians to prioritise long-term savings over short-term trading, highlighting the importance of pension assets for financial security. He noted pension assets are only 17% of GDP, significantly lower than OECD peers, indicating room for growth.

Chief Economic Adviser V Anantha Nageswaran believes more Indians must shift investment behaviour from short-term trading to long-term savings, noting that pension assets are crucial for financial security in old age, PTI reported.

It added that of the ₹18 lakh crore corpus under the National Pension System (NPS) as of September, around 47% is invested in government securities (G-Secs), 28% in equity, and 21% in corporate debt.

“The Indian saver has shown a willingness to accept market risk or so we would like to believe. What the saver has not yet done at scale is to commit savings for a longer tenure. That is a different decision because in general Indians do not optimise for the long term,” ANI quoted Nageswaran saying. It added that he noted that behaviour shift would require trust in institutions, accessible financial information and products that do not require savers to become financial experts.

Significant scope for expansion

Nageswarana noted that Economic Survey data showed the share of equity and mutual funds in annual household savings rose from about 2% in FY12 to around 15% in FY25, while the share of bank deposits fell from over 58% to about 35%.

Monthly systematic investment plan (SIP) flows also rose from under ₹4,000 crore in FY17 to over ₹28,000 crore in the first eight months of FY26. However, the share of pension and insurance assets in household savings remained unchanged between FY19 and FY24.

Nageswaran said India's total pension assets were about 17% of GDP, against at least 80% in OECD peer countries, indicating significant scope for expansion.

‘Less exciting’ but peace of mind post-retirement